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James Hyerczyk
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EUR/USD

The Euro is trading lower against the U.S. Dollar on Tuesday after the release of a report that showed Euro Zone inflation held steady as expected last month, taking a break in what is likely to be a temporary but sharp spike in consumer prices in the coming months.

Perhaps helping to put a lid on the Euro is chatter saying instead of tightening on higher inflation, the ECB may actually ease further, possibly as soon as its March 11 meeting, to counter a recent rise in nominal yields, which threatens to choke off growth by making borrowing more expensive.

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At 13:36 GMT, the EUR/USD is trading 1.2027, down 0.0022 or -0.18%.

“Headline inflation will almost certainly rise further in the coming months, to around 2% due to further rises in food and energy price inflation,” ABN Amro said in a note before the data release. “However, it will be very likely to a one off…leading to a sharp drop in inflation as the disinflationary pressures from the economic shock come to the fore.”

Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through 1.2243 will signal a resumption of the uptrend. The main trend will change to down on a trade through 1.1952.

The minor trend is down. This is driving the momentum lower.

The EUR/USD is currently trading inside the main retracement zone at 1.2074 to 1.2010. This zone is controlling the near-term direction of the Forex pair.

The short-term range is 1.2349 to 1.1952. Its retracement zone at 1.2151 to 1.2197 is resistance, and a potential trigger point for an acceleration to the upside.

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Daily Swing Chart Technical Forecast

The direction of the EUR/USD on Tuesday is likely to be determined by trader reaction to 1.2010.

Bullish Scenario

A sustained move over 1.2010 will indicate the presence of buyers. This could trigger a rally into 1.2074. This is a potential trigger point for an acceleration to the upside with 1.2151 the next likely upside target.

Bearish Scenario

A sustained move under 1.2010 will signal the presence of sellers. This could trigger an acceleration to the downside with 1.1952 the next likely downside target.

For a look at all of today’s economic events, check out our economic calendar.

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